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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
May 7, 1996
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Date of Report (Date of earliest event reported)
M-Wave, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 33-45499 36-3809819
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
216 Evergreen Street, Bensenville, Illinois 60106
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(Address of principal executive offices) (Zip Code)
(708) 860-9542
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(Registrant's telephone number)
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ITEM 5. OTHER EVENT.
On May 7, 1996, the Registrant announced a net loss of $2.1 million,
or $0.70 per share, for the first quarter of 1996, compared with earnings of
$917,051, or $0.30 per share a year ago.
Reference is made to the Registrant's press release dated May 7, 1996
(Exhibit 1.)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibit 1. Registrant's press release dated May 7, 1996
concerning first quarter of 1996 results.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
M-WAVE, INC.
/s/ JOSEPH A. TUREK
-----------------------------------
Joseph A. Turek
Dated: May 7, 1996 Chairman, President
and Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially-
Exhibit Numbered
No. Description Page
----- --------------------- ------
<S> <C> <C>
1 Registrant's press release dated May 7, 1996
concerning first quarter results. . . . . . . . . . . . . . . . 5
</TABLE>
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FOR IMMEDIATE RELEASE
MAY 7, 1996
M-WAVE ANNOUNCES FIRST QUARTER LOSS
OPERATIONAL CHANGES BEING IMPLEMENTED
BENSENVILLE, ILL., MAY 7, 1996-M-Wave, Inc. (Nasdaq:MWAV), a leading
manufacturer of printed circuit boards used in wireless communications such as
cellular phones and direct broadcast satellite (DBS) television antennas,
announced a net loss of $2.1 million, or $0.70 per share, for the first quarter
of 1996, compared with earnings of $917,000, or $0.30 per share a year ago.
Net sales were $6.3 million for the quarter, compared with $8.03
million a year ago. Joe Turek, chairman and CEO of M-Wave, noted that the loss
was primarily the result of a slow down in orders from the company's largest
customers as well as production problems, which resulted in higher than
expected manufacturing costs and sales returns. The loss includes related
inventory and accounts receivable writedowns.
Turek stated that sales volumes and orders during the first quarter of
1996 were lower than anticipated due to overall slowness in the industries
M-Wave serves, including the cellular industry. He noted that the company has
experienced a reduction in orders from key customers that began in 1995, and is
continuing in 1996. Management has previously disclosed its efforts to broaden
its customer base and lessen its dependence on a few key customers and
contracts.
Turek said that the company has begun to make operational changes
designed to enhance M-Wave's quality control and ability to manufacture highly
complex products. These changes, which were developed by the company with the
assistance of outside consultants, include a reorganization of the company's
operating structure. Specifically, Mr. Turek said that M-Wave has designated
teams which are responsible for each critical step in the manufacturing
process, including quality, engineering and research and development. Turek
also noted that the company plans to install an integrated computer network
which would provide real time data on the status of product design,
manufacturing, inventory and shipping.
"Our goal is to be able to focus our core competencies and employee
expertise on those projects that will bring the greatest returns," said Turek.
"With greater overall control, and the proper financial incentives, we
anticipate that this new structure will result in more efficient operations."
Turek explained that the company continues to work to lessen its
dependence on key customers and the maturing cellular industry by pursuing
business opportunities in fields such as direct broadcast satellite, wireless
communications and military electronics and avionics. According to Turek, P C
Dynamics' 45,000 square foot manufacturing facility, which is being completed
in Frisco, Texas, provides the company with the opportunity to increase its
presence as a supplier of circuit boards to the military market. The company
plans to commence manufacturing at this facility during the second quarter of
1996. Mr. Turek said that the
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company's results of operations in 1996 and
beyond will depend on its ability to effectively use this facility and M-Wave's
other manufacturing resources.
Headquartered in the Chicago suburb of Bensenville, Illinois, M-Wave
is a manufacturer of microwave printed circuit boards worldwide through its
wholly owned subsidiaries, Poly Circuits and P C Dynamics. M-Wave's products
are used in a variety of commercial and military applications including
cellular systems, DBS, and personal communications systems. The company trades
on the Nasdaq National Market under the symbol "MWAV."
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M-WAVE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------
1995 1996
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<S> <C> <C>
Net sales $8,034,178 $6,256,558
Cost of goods sold 5,498,377 8,090,779
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Gross profit (loss) 2,535,801 (1,834,221)
Operating expenses:
General and administrative 559,036 736,692
Selling and marketing 406,940 483,403
Research and development 112,264 121,355
------------- -------------
Total operating expenses 1,078,240 1,341,450
Operating income (loss) 1,457,561 (3,175,671)
Other income (expense):
Interest income 80,277 29,551
Interest expense (15,999) (58,004)
Loss on disposal of assets 0 (149,751)
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Total other income (expense) 64,278 (178,204)
Income (loss) before income taxes 1,521,839 (3,353,875)
Provision (credit) for income taxes 604,788 (1,227,531)
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Net income (loss) $917,051 ($2,126,344)
============= =============
Net income (loss) per share $0.30 ($.70)
Weighted average shares 3,067,867 3,020,375
</TABLE>
See notes to consolidated financial statements.
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PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
M-WAVE, Inc.
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $2,403,747 $222,402
Marketable securities $1,321,358 $1,008,615
Accounts receivable,net of allowance
for doubtful accounts of $10,000 4,106,494 4,108,655
Inventories 3,462,200 2,595,591
Refundable income taxes 639,112 901,924
Deferred income taxes 154,682 707,373
Prepaid expenses and other 331,010 219,293
--------------- ---------------
Total current assets 12,418,603 9,763,853
PROPERTY, PLANT AND EQUIPMENT:
Land, buildings and improvements 2,680,882 6,012,230
Machinery and equipment 10,043,357 10,991,914
--------------- ---------------
Total property, plant and equipment 12,724,239 17,004,144
Less accumulated depreciation (2,629,466) (2,973,749)
--------------- ---------------
Property, plant and equipment-net 10,094,773 14,030,395
GOODWILL 873,636 848,190
OTHER ASSETS 20,811 23,357
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TOTAL $23,407,823 $24,665,795
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $1,734,831 $2,314,096
Accrued expenses 1,163,692 1,476,976
Current portion of long-term debt 409,338 603,617
--------------- ---------------
Total current liabilities 3,307,861 4,394,689
DEFERRED INCOME TAXES 723,130 723,130
LONG-TERM DEBT 11,239 2,308,726
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized, 1,000,000
shares; no shares issued
Common stock, $.01 par value; authorized, 10,000,000
shares; 3,040,375 shares issued and 3,020,375 shares
outstanding at December 31, 1995 and March 31, 1996 30,404 30,404
Additional paid-in capital 7,488,422 7,488,422
Retained earnings 11,966,767 9,840,424
Treasury stock: 20,000 shares, at cost (120,000) (120,000)
--------------- ---------------
Total stockholders' equity 19,365,593 17,239,250
--------------- ---------------
TOTAL $23,407,823 $24,665,795
=============== ===============
</TABLE>
See notes to consolidated financial statements.
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M-WAVE, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------------
1995 1996
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $917,051 ($2,126,344)
Adjustments to reconcile net income (loss) to net cash flows
from operating activities:
Depreciation and amortization 256,946 369,729
Deferred income taxes 144,264 (552,691)
Changes in assets and liabilities:
Accounts receivable-trade (1,127,451) (2,161)
Insurance proceeds receivable 400,000 0
Inventories (885,990) 866,609
Income taxes 431,680 (262,812)
Prepaid expenses and other assets 38,650 109,171
Accounts payable 533,992 579,266
Accrued expenses (363,915) 313,284
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Net cash flows from operating activities 345,227 (705,949)
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INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,648,173) (4,279,905)
Redemption of marketable securities 0 312,743
Collection of notes receivable 4,678 0
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Net cash flows from investing activities (1,643,495) (3,967,162)
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FINANCING ACTIVITIES:
Common stock issued upon exercise of stock options 17,062 0
Mortgage debt incurred 2,496,007
Payments on capital leases (8,738) (4,241)
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Net cash flows from financing activities 8,324 2,491,766
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NET DECREASE IN CASH AND CASH EQUIVALENTS (1,289,944) (2,181,345)
CASH AND CASH EQUIVALENTS - Beginning of period 6,868,823 2,403,747
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CASH AND CASH EQUIVALENTS - End of period $5,578,879 $222,402
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
1995 1996
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Cash paid during the period for interest $58,004
</TABLE>
See notes to consolidated financial statements.
